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May 30, 2003

Citigroup Global Consumer Business Day

Yesterday, Citigroup held a Global Consumer Business Day (Presentation PDF). Citigroup's card related income has experienced a 29% CAGR over the last five years.

What's the market for Proximity Payments?

Celent is out with a new report on "Convenience Payments" based upon RFID technologies.
Because the benefits of RFID are so enticing, Celent expects the technology to play an increasingly prominent role in payments. Considering that three of the top target retail outlets for RFID payments are quick service restaurants (QSRs), movie theaters, and movie and video game rental stores, RFID represents a significant revenue opportunity. In aggregate, 2002 US sales in all three were over US$160 billion. In 2007, we expect RFID payments to capture at least 8 percent of the revenue obtained by these three outlets.

May 29, 2003

Surprise jumps in credit rates bring scrutiny

Jennifer Bayot reports in the New York Times on credit card issuers adjusting fees based upon updated information regarding cardholder creditworthiness.
A provision now built into most card agreements allows the companies to reset anyone's interest rate based on the size and status of other debts. And improvements in information technology and a change in federal law have spurred card companies in the last couple of years to check their customers' data regularly, not only when they review applications or notice missed payments.

Philips and Visa form major alliance

Visa International and Royal Philips Electronics have announced a major alliance to jointly promote and develop the application of contactless chip technology for payment transactions.
The two global organizations have signed a Memorandum of Understanding (MOU) that outlines the scope of cooperation between the two companies. This agreement includes exploring the business requirements for secure payments utilizing contactless chip technology. Specifically, Philips and Visa are looking to identify joint business partners, such as hardware manufacturers and content providers, and to investigate developing business and technical models that meet their unique needs.

More Micropayments

Tim Oren points out Andrew Odlyzko's paper "The Case Against Micropayments". Although largely negative, Odlyzko's final paragraph offers a glimmer of hope for micropayments:
Still, micropayments may become widespread. There are needs that micropayments are uniquely suited to fill. However, given all the obstacles that micropayments face, they are unlikely to succeed if offered as a service that requires special hardware or software. They are most likely to succeed if they piggyback on top of something that is already widely used, such as cell phones, or (in some places) mass-transit smart cards. When offered as an additional feature for something that is already carried by most of the population, micropayments might be able to overcome the usual chicken and egg problem, and find their (very likely small) niche in the economy.
So, when and where might a breakthrough in adoption of micropayments on a mass scale occur? A Google News search on micropayments reveals a lot going on. Update: Paul Guthrie comments via email:
I think one might argue that Micropayments have broken through if you include Premium rate SMS transactions (mostly in Europe) or NTT DoCoMo's model in Japan. These approaches might more accurately be called micro-billing. As for something successful on the web, still very little is going on. So, the question in my mind, is with a convergence going on between web and mobile technologies, when will one of these systems start getting mainstream make the transition, and is a transition even possible, considering the mindset of web users is not to pay for anything, while the mindset of mobile users is to pay for every little thing.

May 27, 2003

Micropayments Redux at the Apple iTunes Music Store

Over on the Glenbrook site, we've just posted a new opinion piece about my experiences with the Apple iTunes Music Store and some observations about it from the perspective of micropayments.

Online bill payment tipping point?

NACHA reported this morning that online bill payment volumes increased sharply during the first quarter of 2003.
During the first quarter of 2003, NACHA estimates that more than $48 billion in online bill payments were made in which the Automated Clearing House (ACH) Network was the payment system used. That figure is half of the amount of $96 billion for all of 2002. At the current growth rate, the amount would exceed $200 billion for all of 2003. In contrast, a recent survey estimated online sales figures of $76 billion for 2002 and $96 billion for 2003.
Meanwhile, CRMdaily reports on Forrester research on business to business usage of electronic invoice presentment and payment.

Security at financial services firms

Deloitte & Touche has announced the results of a recent survey of the state of IT security at 78 global financial institutions.
Thirty-nine percent of respondents that experienced a security breach within the past year stated that only 10 percent of the attacks originated internally - contradicting common belief that the vast majority of cyber crime originates from within the organization rather than an external attack.

Interesting Businesses: Optimizing cash in ATM's

NCR and Transoft International this morning announced a deal with UBS in Switzerland for a system that manages the amount of cash the bank maintains in both branches and ATM's.
Using OptiCash, a solution that applies mathematical algorithms to historical, event and cost information, UBS will be able to optimize the level of cash held at its branches and ATMs (1,300 outlets in total) in Switzerland. This approach leads to obvious benefits in terms of reduction in interest and cash-handling costs.


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